Art and Science of Venture Capital Marcin Hejka, Intel Capital TMT Executive Seminar March 15th, 200

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Art and Science of Venture CapitalMarcin
Hejka, Intel CapitalTMT Executive
SeminarMarch 15th, 2005
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Venture Capital Myths

• VCs invest based purely on the numbers
• VCs invest based purely on the gut feeling

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Venture Capital Reality

• It is necessary to use up the science before
  turning to the art
• VCs relying purely on their gut feel are doomed
  to have trouble

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Art vs Science

• People
• Mgt
• Investors
• The story
• The deal

• Market
• Competition
• Technology
• Proprietary position
• Financial requirements

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Portfolio Aproach

• Winners have to make up for losers
• Multiple investments in the same company
• Start preparing for liquidity at investment

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Venture Capital invest or not

• Business Plan screening
• 80/20 rule applies
• Due diligence
• People
• Business model
• Value proposition
• Technology
• Competitive landscape
• Numbers
• etc.

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Why VCs reject proposals

• Does not fit VCs objectives
• Plan 300
• Round F (there are exceptions)
• No competition (?!)
• Me too
• Projections (100M rev in the first year)
• Does not feel right

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The Numbers

• Less than 1 in 100 deals will get funded.
• Some good deals will not get funded.